What is the system32 file??

In Windows operating system, in every version I have operated. Till now I haven't seen the System32 file. What is this? Why this is named like this, why the "32" is given in the file name? What is it's job? I have seen that if I delete this file, the system fails. Why? Why is this file is so important and if the file affected by any Virus what happens? Is there any way to repair this file? And is there any way to replace this file if it's deleted?
What should I do if the system32 file becomes corrupted? Is there any difference between the system files of Windows XP and Windows Seven? Do they work same way? I have tried to understand the function of this file but can't fully understand what it really does. So someone tell me about this in detail so I can understand it clearly.
